Review of carrier video service trends and opportunities. Examining the history of carrier video, the impact of the internet going video, how operators are responding with open innovation and some real-world developer case studies.

1. Carrier Video
Services:
Trends and
Opportunities
Alan Quayle
Business and Service Development
www.alanquayle.com
www.alanquayle.com/blog
www.linkedin.com/in/alanquayle
1
© 2008 Alan Quayle

2. Video Service The Internet
s ’s
History gone Video
Operators an
d Case Studies
Open Innovat
ion
2
© 2008 Alan Quayle

3. Video Timeline ’50s-’90s
’60-’70s ’80s ’90s
PSTN Video phone (built by
Marconi) went on sale in ‘92.
ISDN Video conferencing starts BT Relate 2000 shown.
First Picturephone system
after CCITT H.120 standard
built in ’56 by AT&T. By ‘64
created in early ’80s. ISDN 2B
the quot;Mod 1quot; was tested
between Disneyland and the videophones start to appear by
New York World's Fair. the end of the ’80s
Our greatest glory is not in
never falling, but in rising every Soon after in ’93 BT started
trialing Video on Demand.
3
time we fall. -- Confucius © 2008 Alan Quayle

4. And then a Tipping Point was reached in the ’00s
4
© 2008 Alan Quayle

5. Impact of Video on Network Traffic
0.125% of Y
ouTube
inventory is r
esponsible
f o r 5 6 % of
its traffic
5
© 2008 Alan Quayle

6. Users Pay for Video, Advertising Expands Consumption
• Despite success of free services like Hulu & BBC iPlayer, customers
remain willing to pay if they perceive value
– E.g., Apple iTunes video store, Disney online, Verizon FiOS, Sony Store (PS3), etc.
In the limit the customer will decide the mix of subscription
(Sports/Premium), ad-supported (VoD), and download-to-own
6
© 2008 Alan Quayle

7. The Internet has gone Video: Fixed Broadband Impact
YouTube now ~10% of global Internet traffic
BBC’s iPlayer now ~15% of all UK Internet traffic
7
© 2008 Alan Quayle

8. 8
© 2008 Alan Quayle

9. 9
© 2008 Alan Quayle

10. 10
© 2008 Alan Quayle

11. 11
© 2008 Alan Quayle

12. Where’s the Money?
• In ’07, 900m streams/downloads of
premium and niche online TV were
consumed in the UK
– Driven by free video from the BBC
• In ’07 market value was estimated at
£34m (excluding subscriptions)
– Average rev per stream/download of 4 pence
– US average per stream/download is 8 pence
• Only 40% of UK revenue comes from
advertising
– US is roughly 55%
12
© 2008 Alan Quayle

13. The Internet has gone Video: Mobile Impact
• Mobile Broadband (MBB) is growing faster than voice (based on customers)!
– In Sweden, Berg Insight estimates 500K mobile broadband terminals (USB/PC cards)
in ‘07 generated more traffic than all 10M handsets in market
• Internet no longer ‘hides’ at home and in the office
– Usage model of fixed broadband has gone mobile
– Video streaming quality is becoming a critical yardstick – hence interest in H.324 (3G-
324M) as it uses the circuit switched quality of service provided by 3G networks
13
© 2008 Alan Quayle

14. YET: Why hasn’t that been reflected in mobile video telephony?
• Networking effects are powerful both in a positive
and negative sense
Worldwide M obile Video Phone Unit Shipments
However, total
phone sales in ‘07
>1.1B. Most
people do not have
2,000
a videophone!
1,500
Units (M)
1,662
1,305
1,000
963
135 243
682 500
417
0
CY05 CY06 CY07 CY08 CY09 CY10 CY11
Calendar Year
Source Infonetics
Same problem as SMS unless most people can use it, no one uses it
14
© 2008 Alan Quayle

15. YET: Why hasn’t that been reflected in mobile TV?
• Trials have demonstrated four main use cases for mobile TV.
– Commuting: large, urban areas.
– Large Periods of Downtime: waiting.
– Home: private, personal time.
– Secret Uses: Semi-quick breaks during the day for young consumers at school
and adults at work.
• Technology diversity: There are now at least 15 separate Mobile TV
technologies – complexity stifles the market
• Japan has now shipped more than 20 million ISDB-T (Integrated Services
Digital Broadcasting-Terrestrial) mobile handsets, and Korea has 8 million T-
DMB (Terrestrial Digital Multimedia Broadcasting) devices, many of which
are not handsets.
– Focus is free-to-air services, which are driving the transition to Mobile TV, but it
does not improve ARPU for cellular operators.
• Verizon and AT&T view free-to-air Mobile TV as a threat to be countered
rather than a service to be offered.
– They prefer streamed cellular video services, which at least improve ARPU, even
if it is for a minor percentage of their total customer base.
• ARCchart estimated 301 million handset devices, that can receive one or
other format of Mobile TV, will be sold by 2012
– Its happening whether operators like it or not
– Advertising model is proving challenging for operators
Is it yet again argument of closed versus open?
15
© 2008 Alan Quayle

16. Is it Really this Simple?
Open Internet Video
Operator’s Closed
Video Garden
16
Party
© 2008 Alan Quayle

17. What’s the Benefit to Operators? Opening up the Long Tail
Total ARPU uplift 12%-36%
Operator Branded: Cooler operator services, extract greater
value from segments within the customer base, lower internal
costs and time to market for new features – making it more
economic to address the segments. ARPU uplift 4-10%
No. of
users Co-Branded: Access cool web communities or tailored
services for brands, e.g. a Disney, BBC or Playboy widget.
ARPU uplift 3-8%.
Long Tail
Enabled: extends reach of services to segments operators can not
economically reach, e.g. SMB
Endorsed: extends operators ability to execute on its product roadmap,
test out the 80% of the roadmap never implemented.
Internet: Co-opt Google’s success to the Telco API.
ARPU uplift 5-18%
Services
17
© 2008 Alan Quayle

18. Operator Activities in Opening the Network
• Telenor Content Provider Access (CPA)
– Generate within Norway roughly $100m a year in revenue, that is 6% of
Telenor’s total subscription revenues.
• O2 Litmus (www.O2litmus.co.uk)
– Recently announced by O2, to be launched in late 2008, extensively
leveraging web 2.0 principles.
• Telecom Italia NexTIM
– Telecom Italia’s web 2.0 site exposing new services to its early adopting
‘360 degree innovators.’ Letting the market decide what services to
launch, rather than solely internal product management processes.
• SingTel Partners Program
– Leverage external 3rd party developers to tap into their potential of
unlimited innovation to drive new revenues. Promote access to limited
network resources and capabilities; reduce time-to-market for launching
new services and provide mechanisms for 3rd parties to be paid.
• ProgrammableWeb
– An aggregator of APIs across operators and the internet, including
Orange Partners and BT’s 21C APIs.
• Orange Partner
– As a simple case study, it took only seven months from Orange’s first
meeting with a developer called mob-it (www.mob-it.com) to launch a
public beta of that service integrated into Orange’s picture service Pikeo,
using its open APIs.
• And many others including:
– Verizon’s ODI (Open Developers Initiative, Sprint’s Business Mobility
Framework, and AT&T’s devCentral
18
© 2008 Alan Quayle

19. Potential Telco API capabilities (from App Vendor Survey)
• Authentication & Single Sign-on • Home Network Enabler
• Presence (device, application, call state) • Content Delivery
and Availability
• Policy (Quality of Service)
• Mobile Video
• IPTV enablers
• Device Capabilities / Software
• Location (accuracies and freshness), • IPTV STB enablers
Proximity, Heading, Speed • Content Enablers
• Preferences (policies or rules) • Collaboration Enablers
• Context – a combination of presence, • VoIP / SIP call control including invoking
location, device status, application status, supplementary services
meeting status (calendar), etc.
• Fulfilment and other BOSS capabilities
• Customer data (business intelligence)
• Call Control • Digital Rights Management
• Messaging • Device Management
• Network address book • Local dial in number provisioning
• Group List Server (buddy lists) • Ringtone purchase integration
• Enterprise Mobilization • Video-ringtone platform
• VoIP / SIP: tone insertion • Subscription status
• Call Flow: ACD, IVR, CRM, Helpdesk • Message Store
• Charging / Billing
• CDR number frequency search
• Call Log / Call events
• Calling Name dip
• Directory
19
And the list goes on, much further on…..
© 2008 Alan Quayle

20. 20
© 2008 Alan Quayle

21. 21
© 2008 Alan Quayle

22. 22
© 2008 Alan Quayle

23. Use Case
• Jim’s recently hired a nanny to look after his two young sons
• When he’s on the road he can also check-in from his mobile phone, just to
make sure everything is OK. He also shares access with his parents so they
can check in from their IPTV STB
– Single Sign On and IPTV video streaming API to ensure quality delivery of video
• While at work using a bookmark in his PC browser Jim goes to the
HomeCamera site, logs on, gets a message to his mobile to confirm its him,
and can view his home cameras
– Messaging API for additional security
• While at work he can schedule an event at 2PM to see they’re getting their mid-
afternoon nap from his PC
– Messaging API for deliver of video clip
• From his mobile, he either uses the browser to the Home Camera service, or
uses an ODP (integrated family services) to check on his kids location, and then
views the home camera to make sure they’re behaving themselves
• While on holiday (house is empty) the system is set so that should there be
movement a video clip is sent to his phone
– Messaging API
23
© 2008 Alan Quayle

24. Conclusions
• Operators are finally starting to listen
– Get in there and tell them what you need!
– For example, sign up to O2 Litmus,
www.o2litmus.co.uk
– Its now up to the application developer to innovate,
the operator enables, developers lead!
• The Internet is no longer hiding
– Its pervasive at pricing points most consumers can
afford: prepaid 10GBP for 1 month
– iPhone, laptop, feature-phones/PDAs with open
access
• Barriers to entry are being removed, cost of failure
lowering
– Opportunities for a myriad of profitable niches:
Cougars, Sex-Ratio Singles, Commuter Couples,
Interracial families, Sun-haters, New old Dads….
– Many emerging unmet needs and people now
expect video
24
© 2008 Alan Quayle

25. Suggested Reading
Microtrends, Mark Penn
Here Comes Everybody,
Clay Shirky
The Gridlock Economy,
Michael Heller
www.alanquayle.com/blog
25
© 2008 Alan Quayle